How Investors Can Navigate Twitter Without Going Insane

MINYANVILLE ORIGINAL For investors, Twitter is nothing short of a revolution.

Every twist and every turn in every stock, index, and commodity is followed by Twitter’s millions of interconnected investors, who are all too happy to report on what’s going on, 140 characters at a time on a 24/7/365 schedule.

In terms of effectiveness, Twitter dwarfs every other financial communications tool ever -- including other social-media outlets like Facebook (FB) -- in terms of speed, ease of use, comprehensiveness, and equality of access.

The problem comes in that these traits are also Twitter’s biggest problems.

Since everyone with a PC or phone can access Twitter, there’s an overabundance of people to whom you probably shouldn’t be listening.

And the most popular investors and traders on Twitter aren’t necessarily helpful in terms of helping you make the right traders -- they might just be really good at Twitter.

So who should you follow?

Who should you avoid?

And how do you cut through the nonsense to find information that can actually help you navigate the market without going insane?

With these questions in mind, I put together a quick selection of tips to help you get the most out of Twitter, based upon what I’ve learned from watching the financial Twit-O-Sphere all day, every day for far too long.

1. Seek out Informers and Entertainers.

There are two primary groups of people worth following on Twitter -- the ones that inform you, and the ones that entertain you. Some people can actually do both, but they’re few and far between.

When it comes to finding people that will inform your views, you have a few options.

First, you can simply ask fellow investors, “Who should I follow?”

Secondly, you can simply seek out folks you find in other forms of media whose work impresses you, as well as those media outlets themselves.

And finally, you can search Twitter for stock tickers with dollar signs in front of them. For example: on Twitter, Google’s (GOOG) ticker is $GOOG. You can also access ticker-specific feeds on StockTwits.com, which organizes financial tweets.

This way, you can find people that are commenting on stocks in which you are specifically interested, and thus they may be worth following.

Now overall, I tend to focus on people that regularly provide useful links and data points, simply because I’m not interested in a nonstop stream of opinions that aren’t supported by real evidence. After all, 140 characters can only say so much, especially when it comes to complex financial topics.

And secondly, I follow people that I genuinely find entertaining, simply because Twitter shouldn’t be all work and no play. I value laughs as much as I value charts and economic numbers.

2. Avoid the Annoyers, Trolls, and Mindless Babblers.

Now let’s talk about an even more important topic -- who NOT to follow on Twitter.

The most important rule to follow here is simple: never let anyone that ups your blood pressure into your Twitter feed.

I avoid the following groups of people: fans of Windows Phone, pompous value investors that think everything is overpriced, and the worst offenders all -- anonymous permabears that pretend to be big-time hedge-fund traders.

All of these people do a great job of keeping my attention. That means that they not only get on my nerves, but they waste my time, and that more than offsets any pearls of financial wisdom they may inadvertently drop.

I also highly recommend avoiding/unfollowing people that talk a lot but say nothing. If someone’s constantly shouting out stock and index and commodity moves without any useful analysis or commentary, I drop them immediately because they just hog up my feed without adding any value.

3. Follow as Few People as Possible.

Just as it’s important to pay attention to the quality of the people you’re following, take care to monitor the quantity.

On Twitter, it’s far better to follow a small number of helpful people than a mass of morons.

Aside from the importance of not following useless people, every time something important happens (a jobs number, a big earnings report, an Apple (AAPL) product announcement), far too many people feel the need to report the exact same news at the exact same time.

How many times did you need to hear about the iPad’s new screen?

One did it for me.

And do you really need 500 people informing you that the job market stinks?

Since I aggressively use the Unfollow button off on Twitter, I tend to follow less than 200 people and companies. Experiment to find your own limits.

4. Interact!

The financial Twit-O-Sphere can be fun for observers, but you might get a whole lot more out of it if you step up and contribute to the flow of ideas.

Twitter was built from the ground up to facilitate spontaneous communication, making it easy to interact with other market participants -- including big-time investors and media personalities.

So you might just find that you can send a Tweet to a guy you just saw on TV, and get a response.

In addition, you’ll often find that the Twitter community is awfully effective at answering questions about moves in particular stocks and locating arcane data points, so long as you properly tickerize your posts (again, on Twitter and StockTwits.com, Google = $GOOG). The Twitter community can be especially helpful when it comes to small and midcap names that aren't properly covered by mainstream media outlets.